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Does Exporting Improve Matching? Evidence from French Employer-Employee Data

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Does opening a market to international trade affect the pattern of matching between firms and workers? This paper answers this question both theoretically and empirically in three parts. We set up a model of matching between heterogeneous workers and firms in which variation in the worker type at the firm level exists in equilibrium only because of the presence of search costs. When firms gain access to the foreign market, their revenue potential increases. When stakes are high, matching with the right worker becomes particularly important because deviations from the ideal match quickly reduce the value of the relationship. Hence, exporting firms select sets of workers that are less dispersed relative to the average. We then document a novel fact about the hiring decisions of exporting firms versus non-exporting firms in a French matched employer-employee dataset. We construct the type of each worker using both a traditional wage regression and a model-based approach and construct measures of the average worker type and worker type dispersion at the firm level. We find that exporting firms feature a lower type dispersion in the pool of workers they hire. This effect is comparable and larger than the common finding in the literature that exporters pay higher wages because, among other factors, they employ better workers. The matching between exporting firms and workers is even tighter in sectors characterized by better exporting opportunities as measured by foreign demand or tariff shocks. Finally, we show that revenue loss is lower relative to the optimum allocation for exporting and more productive firms. This analysis is suggestive of the potenti al presence of additional gains from trade due to improved sorting.

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  • Matilde Bombardini & Gianluca Orefice & Maria D. Tito, 2015. "Does Exporting Improve Matching? Evidence from French Employer-Employee Data," Finance and Economics Discussion Series 2015-113, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgfe:2015-113
    DOI: 10.17016/FEDS.2015.113
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    2. Magnus Lodefalk & Fredrik Sjöholm & Aili Tang, 2022. "International trade and labour market integration of immigrants," The World Economy, Wiley Blackwell, vol. 45(6), pages 1650-1689, June.
    3. Italo Colantone & Alessia Matano & Paolo Naticchioni, 2020. "New imported inputs, wages and worker mobility," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 29(2), pages 423-457.
    4. Gianluca Orefice & Giovanni Peri, 2020. "Immigration and Worker-Firm Matching," Working Papers DT/2020/02, DIAL (Développement, Institutions et Mondialisation).
    5. Emma Lappi, 2024. "New hires, adjustment costs, and knowledge transfer—evidence from the mobility of entrepreneurs and skills on firm productivity," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(3), pages 712-737.
    6. Julia Fonseca & Adrien Matray, 2022. "Financial Inclusion, Economic Development, and Inequality: Evidence from Brazil," Working Papers 308, Princeton University, Department of Economics, Center for Economic Policy Studies..
    7. Kwon, Ohyun & Zhao, Hao & Zhao, Min Qiang, 2023. "Global firms and emissions: Investigating the dual channels of emissions abatement," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    8. Marchal, Léa & Nedoncelle, Clément, 2017. "How foreign-born workers foster exports," Kiel Working Papers 2071, Kiel Institute for the World Economy (IfW Kiel).
    9. Emma Lappi & Johan E. Eklund & Johan Klaesson, 2022. "Does education matter for the earnings of former entrepreneurs? Longitudinal evidence using entry and exit dynamics," Journal of Evolutionary Economics, Springer, vol. 32(3), pages 827-865, July.
    10. Demir, Banu & Fieler, Cecilia & Xu, Daniel Yi & Yang, Kelly Kaili, 2021. "O-Ring Production Networks," CEPR Discussion Papers 15741, C.E.P.R. Discussion Papers.
    11. Richard Holt, 2020. "The Costs of Mismatch," Edinburgh School of Economics Discussion Paper Series 298, Edinburgh School of Economics, University of Edinburgh.
    12. Matthieu Crozet & Gianluca Orefice, 2017. "Trade and Labor Market: What Do We Know?," CEPII Policy Brief 2017-15, CEPII research center.
    13. Fonseca, Julia & Matray, Adrien, 2024. "Financial inclusion, economic development, and inequality: Evidence from Brazil," Journal of Financial Economics, Elsevier, vol. 156(C).
    14. Sarah Schroeder, 2020. "Exporters, Multinationals and Residual Wage Inequality: Evidence and Theory," CESifo Working Paper Series 8701, CESifo.
    15. Muendler, Marc-Andreas, 2017. "Trade, technology, and prosperity: An account of evidence from a labor-market perspective," WTO Staff Working Papers ERSD-2017-15, World Trade Organization (WTO), Economic Research and Statistics Division.
    16. GORYUNOV, Maxim, 2017. "Sorting when firms have size," Economics Working Papers MWP 2017/09, European University Institute.

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    More about this item

    Keywords

    International Trade; Search frictions; Worker-Firm Matching;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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